Bill could allocate money to Pell Grants

Katie Austin was once denied a Pell Grant when she applied.

The Livonia senior is one of many students nationwide who could benefit from a student loan bill expected to go before the U.S. Senate within the next several days.

The bill could raise the maximum amount of money available through federal Pell Grants, allowing more students eligible to receive one.

“Every dollar that I get comes from financial aid or student loans,” Austin said. “I’m definitely in favor of the bill.”

According to previous reports, 6,275 students enrolled at Central Michigan University as of last fall hold a Pell Grant. The maximum amount of money possible through a Pell Grant is $5,550. The new legislation looks to raise that maximum to approximately $6,400.

Reps. Joe Courtney, D-N.Y., and Tim Bishop, D-Conn., held a phone conference with college reporters Wednesday to discuss the bill, which will be an updated form of the Student Aid and Fiscal Responsibility Act approved by the U.S. House in September.

The bill was initially thought to save $87 billion in taxpayer money over the next 10 years by making all college loans direct lending with the government, rather than using private lenders to distribute the funds.

However, after a re-analysis, congressional Democrats now believe the bill will only save $67 billion because of universities making the transition to direct lending on their own. When this happens, Bishop said, the money saved cannot be used toward increasing Pell Grants’ maximum.

As more universities continue to make the switch, Bishop and Courtney said it is crucial the bill be approved quickly in order for students to benefit.

“This is a very hopeful time for those who care about helping students,” Bishop said. “I’m very optimistic that we’re going to get this passed.”

Financial job loss?

Many private student loan lenders, such as Sallie Mae, have voiced concern about the new legislation possibly resulting in job loss for those in the financial industry. Bishop and Courtney agree these claims hold no validity as the bill does not eliminate private lending, but merely directs taxpayers’ dollars toward students and their families rather than banks.

“The direct student loan program will still rely on private contractors to service loans,” Bishop said. “There’s no question that the benefit to students will make up for it.”

Courtney said they hope to use $40 billion of the $67 billion savings exclusively to raise the maximum amount of money given by Pell Grants.

To accelerate the process, the bill has been partnered with the health care reform bill to spare funds. This, Bishop said, was the intent all along.

“This measure is about directing resources directly to students and families,” he said.